King’s Hawaiian brings aloha spirit to buns category

by Eric Schroeder
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As the summer grilling season has heated up, so too has the buns and rolls category. In the 52 weeks ended June 15, dollar sales in the fresh rolls/buns/croissants category totaled $1,887,156,136, up 6% from the same period a year ago, as unit sales increased 4% to 687,838,888, according to Information Resources, Inc., a Chicago-based market research firm.

King’s Hawaiian, a Torrance, Calif.-based maker of bread and rolls, is one of the companies pacing category growth. With dollar sales of $296,014,264, King’s Hawaiian recently overtook Bimbo Bakeries USA as the leading “all other fresh rolls/buns/croissants” vendor, according to I.R.I. Dollar sales at King’s Hawaiian soared 20% in the 52 weeks ended June 15 on a 7% increase in unit sales, while Bimbo’s dollar sales fell 9% to $241,464,996 on a 9% decline in unit sales.

Founded in Hilo, Hawaii, in 1950, King’s Hawaiian is a family-owned and operated business that makes Hawaiian products, including the original Hawaiian sweet dinner roll. The company operates baking facilities in Torrance and Oakwood, Ga.

In mid-April, King’s Hawaiian secured $135 million in senior secured financing from GE Capital, Corporate Finance. The financing will be used to expand the company’s production capacity and for working capital.

From 2003 to 2010, King’s Hawaiian steadily invested in upgrading its two West coast bakeries on an annual basis, but as the popularity for its iconic products expanded coast to coast, the company opened a $45 million facility in Oakwood in 2011 to increase capacity and lower shipping costs.

Originally, King’s Hawaiian projected the facility would begin to reach capacity by 2015, but demand for the nation’s largest roll producer’s bread and rolls jumped as household penetration and frequency of purchase continued to rise beyond expectations.

Last year, the company broke ground to double the size of its existing Oakwood bakery during the first half of this year. By 2015, King’s Hawaiian will open another facility — 120,000 square feet — that will house an additional production line. In all, the company projects it will spend $100 million on its Georgia hub since moving there in 2011.

King’s Hawaiian also is making inroads in the hot dog bun category. The company in early July said it is bringing back hot dog buns, which were introduced to the company’s line of authentic Hawaiian bread in 2012. King’s Hawaiian hot dog buns have the same soft, fluffy texture as the company’s signature dinner rolls.

“Our consumers’ feedback is very important to us,” said Erick Dickens, vice-president of marketing at King’s Hawaiian. “When consumers told us how much they love our hot dog buns, we listened. We’re thrilled to be bringing them back in time for summer grilling.”

Meanwhile, at Horsham, Pa.-based Bimbo Bakeries USA, the bun business has experienced better days. In addition to the 9% decline in dollar sales in the “all other fresh rolls/bun/croissants” category, B.B.U. sustained a 6% drop in dollar sales in the hamburger and hot dog buns category, according to I.R.I.

In mid-July, B.B.U. said it will halt production on the bun line at its Fresno, Calif., bakery by Aug. 29. The bakery currently produces bread and bun products, and the line shutdown will affect approximately 60 positions, the company said. B.B.U. said it will shift production to other bakeries in the company’s manufacturing network.

“After careful analysis and consideration, B.B.U. concluded that there is an excess capacity to handle bun production in our California manufacturing system,” said Gary Feil, regional vice-president of operations for B.B.U. in California. Mr. Feil said the action would have no impact on customers and consumers or the availability of B.B.U. products.

Earlier this year, B.B.U. closed its Nashville, Tenn., bakery, which produced bread and buns.

Elsewhere, Pepperidge Farm, Norwalk, Conn., and Martin’s Famous Pastry Shoppe, Chambersburg, Pa., posted solid sales growth in both the buns and rolls categories, while Flowers Foods’ sales were flat in the rolls segment and down in the hamburger and hot dog buns category, according to I.R.I.
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